Credit Unions Report Strong Loan Growth, Net Income Up 5.7% Y-o-Y

The National Credit Union Administration (NCUA) reported strong loan growth at federally insured credit unions during the first quarter of 2015.

Total loans at federally insured credit unions reached $721.9 billion in the first quarter of 2015, an increase of 1.3 percent from the previous quarter and 10.6 percent from the first quarter of 2014. The growth in lending in the first quarter was fueled by auto lending. According to Experian Automotive, credit unions’ share of the total auto finance marketplace expanded from 15.7 percent to 16.9 percent in the first quarter of 2015 compared with the same period a year earlier.

Shares (deposits) grew by $33.6 billion during the first quarter to $984.4 billion.

Because shares grew at a faster rate than loans during the first quarter, the loans-to-shares ratio at the end of the first quarter was 73.3 percent, a slight decline from the previous quarter but 4.1 percentage points higher than the end of the first quarter of 2014.

Federally insured credit unions continued to move away from long-term investments in the first quarter of 2015. The net long-term asset ratio fell from 33.84 percent in 2014 to 32.51 percent at the end of the first quarter of 2015.

Federally insured credit unions reported net income of $2.2 billion in the first quarter, an increase 5.7 percent from the first quarter of 2014. This is the 21st straight quarter of positive net income.

Federally insured credit unions’ return on average assets ratio (ROAA) stood at an annualized 78 basis points at the end of the first quarter, a decline of two basis points from the previous quarter. Net interest margin and fee income as a percent of average assets negatively impacted ROAA during the quarter, while lower operating expenses and higher non-operating income as a percent of average assets positively contributed to ROAA.

The aggregate net worth ratio was 10.81 percent at the end of the first quarter, up 20 basis points from a year earlier; but down 15 basis points from the end of the fourth quarter of 2014. NCUA reported that 97.5 percent of federally insured credit unions were well-capitalized as of the end of the first quarter of 2015, while less than 1 percent of credit unions were undercapitalized.

Delinquency and net charge-off ratios for federally insured credit unions declined to their lowest first-quarter levels in eight years. The delinquency ratio fell to 69 basis points from 81 basis points at the end of the first quarter of 2014. The net charge-off ratio declined to an annualized 47 basis points year-to-date from 50 basis points at the end of the first quarter of 2014.

However, performance data show that large credit unions continue to outperform smaller credit unions. Credit unions with assets of less than $10 million recorded negative loan and membership growth in the first quarter.

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